Gell-Mann Amnesia - Bootstrapping Truth in a Post-Truth Era
Gell-Mann Amnesia: We open up the newspaper to read an article on a topic with which we have great familiarity, say virology. After reading, it becomes clear that the journalist has misreported on the basic properties of viruses. Despite the red flag, we turn the page to the next section, say Asian affairs, and read on as if the paper will somehow report more accurately on Uyghur Muslims or Taiwanese independence. We forget what we know to be true.
In the case of journalism, we forget not only about the symptom, dishonest content, but also the cause, the root misalignment between honest content and a profit motive. In the case of financial services, we forget not only about Lehman, Madoff, and Wirecard, but that the paper guarantees that underpin most of our commercial arrangements are fallible. And finally, we forget not only that governments mis-handle finances and public health, but that corporate lobbies fundamentally undermine the contract between the state and the people.
We tacitly forgive institutions that repeatedly act dishonestly and renege on their social (or legal) contracts. Each subsequent chapter of deception shifts the Overton window: accountability fades and complacency crystallizes. Censorship grows while consensus eludes us.
A Blockchain’s Raison d'être: Generating Consensus
Blockchains exist to generate consensus. For most, consensus revolves around who owns how many tokens. Because the ledger is maintained and audited by a network of computers, neither the New York Times, Robinhood, nor the Maduro regime can affect this truth. Individuals, poor or rich, Tibetan or American, all agree about the state of the Bitcoin blockchain. It is an uncensorable lingua franca.
X Happened, Said Y, at Z Time
In most blockchains, the transactions in a block are attested to by either a miner or validator. The attestor is saying: the transactions in this block are legitimate. Or more simply: reality aligns with the desired outcome of the network’s stakeholders. Because the database is open, the attestor’s work is visible to all. Everybody knows that attestor Y said X outcome occurred at Z time.
This is not trivial. Total transparency around outcomes systematically weeds out malicious actors. Such types cannot get away with opportunism because everyone is watching. Overtime, as more nodes begin investigating stated outcomes, the legitimacy of the consensus increases.
Shared Truth Generates Good Outcomes
As more groups adopt public ledgers and oracle networks to mediate their activities, they’ll customize the parameters of consensus to meet their requirements. Parameters such as the number of nodes who compose the oracle network and the value at stake per node will vary as per the demands of the network’s stakeholders.
Truth shifts from proprietary to shared. Once a community, protocol, or company decides how truth is generated, these contingents can then structure deterministic agreements based on it. These “hybrid smart contracts” combine oracle-generated truths and the automatic release of value, often tokens, by a smart contract. The opportunity to earn deterministically for demonstrating desirable real world outcomes is a powerful incentive—agents will move towards prosocial behavior as defined by the network. In this way, shared truth systematically generates desirable outcomes.
A flywheel is created: shared truth and smart-contract guarantees unlock reliable incentives. Market-based incentives drive more value to the ecosystem. As more value is secured, the requirements for the generation of shared truth, or consensus, intensify. As the shared truth is legitimized, more value enters the ecosystem and so on.
The Design Space for Hybrid Smart Contracts
If we open up our aperture, we can envision using ledgers of record to verify and give rise to a range of desirable real world outcomes. Instead of proof of stake or proof of work, we can envision on-chain proofs of broader states. For example:
Proof of Location: verifying spatial details
Proof of Status: verifying the conditions of vehicles and equipment
Proof of Citation: verifying a publication’s sources
Proof of Expertise: verifying a reputation
Proof of Contribution: verifying sources and remittances of funds
Proof of Regeneration: verifying ecological improvements
Proof of Health: verifying constructive physical health actions
Proof of Immunity: verifying files’ lack of corruption
Let’s add some meat to the on-chain truth matrix:
Proof of Location: Foam was a decentralized location service that sought to build an open, tamper-proof spatial network. The premise was two fold: 1. Satellite mapping is only so granular. 2. Siloed GPS providers are vulnerable to spoofing, hacking, and censorship. The protocol’s design enabled individuals with consumer radios to contribute to and verify the state of the map.
Proof of Regeneration: Regen Network is an ecological ledgering protocol built on the Cosmos SDK. Regen seeks to be the source of shared truth around ecological outcomes. RegenLedger is built to generate consensus on regenerative actions such as top-soil enhancement, reforestation, and water purification through oracle inputs. With the growth in ecological data from satellites, drones, and IoT sensors, the capacity to verify and reward granular ecological outcomes is huge. With a legitimate ecological ledger informed by human and device oracles, Regen will support the creation and exchange of assets that derive their value from verified ecological outcomes.
For a full summary of Regen Network, see here.
Proof of Health: From my research, no one is yet working on the expanded version of this idea quite yet. Medibloc explores on-chain sovereignty of existing medical data. But we have not yet leveraged wearables (Oura, AppleWatch, CGMs etc.) oracles to create new on-chain health data sets. An individual should be able to demonstrate to the market a decreasing health risk profile. Resting heart rate, heart rate variability, and low blood glucose are meaningful indicators of underlying risk.
This formula for systematic proofs becomes really interesting when we consider the derivative products, services, and markets that are unlocked as a result. Proof of location could be used to determine whether the Indian military did in fact cross the Pakistani border in the Kashmir. Or to add granularity to the notoriously opaque supply chain. Proof of Regeneration will enable agents to more quickly and cheaply be rewarded for positive ecological outcomes. This will spur new markets for regenerative credits, financial instruments tied to greening, and crop insurance. Proof of Health will support differential pricing in health insurance or a wholesale transition from correction-based to prevention-based business models. More importantly, health professionals can be held accountable for the prescriptions they make. This will introduce competitive dynamics and thus better service to medicine. In summary, cryptographic consensus bootstraps truth, which unlocks more reliable contracts, which then drive better outcomes in the real world.
A Better Engine for Truth
Explicit censorship is increasing: Twitter deplatforms Trump or Robinhood closes one side of a meme stock trade. These events are loud, visible events—engine failures. But it is the architecture of private databases and faulty contracts, the engine design, that is the problem. Adopting shared ledgers and smart contracts is to rebuild the truth engine from scratch. Karl Benz’s internal combustion unlocked the first consumer car. The cryptographic truth engine will unlock a much larger step up in human welfare.
Disclosure: TJ Ragsdale or Lupine Capital I, LP may hold some of the tokens described in this piece. This publication, Vulpine View, serves a purely educational purpose and in no way should be construed as financial advice.